Amid volatile oil prices, North American midstream energy companies are being presented with unique opportunities. The challenge: to seize the moment and take purposeful action to build agile organizations that can perform successfully in any cycle.

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Navigating the
Crude Cycle
3 strategic actions for
North American midstream
energy companies
Seizing opportunities to
expand and realize improved
results from agility

2. Copyright © 2015 Accenture All rights reserved.
Reverse the decline of
shareholder returns
Despite low prices for crude, revenue streams
continue to flow to companies that process natural
gas and transport and store crude oil, natural gas
and natural gas liquids.
Midstream companies, however, need to reverse the
decline of returns experienced from 2012 to 2014.
In addition, they need to be mindful of change
affecting other sectors, particularly upstream, and
manage volume and credit risks.

3. Prime areas of opportunity
In the current environment, Accenture has
identified three major areas of opportunity
for midstream leaders:
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Expand the footprint. Adopt agile
operating models.
Emphasize safe and
reliable operations.

4. Expand the footprint.
Low oil prices have shaken exploration and production companies,
resulting in increased mergers and acquisitions activities. These in
turn are creating opportunities for midstream companies to add
to their asset bases. The winners will move decisively with an eye
to rebalancing portfolios rather than bargain-hunting.
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Expand strategically
• Diversify the asset portfolio, geographically
by basin and along the value chain.
• Add product interconnects and transportation,
particularly in light of lower-priced feedstocks
for downstream companies.
• Market additional storage capacity,
but optimize existing facilities before
adding capacity.

6. Adopt agile
operating models.
Nimble operating models enable
faster adaptation to external market
changes. Such a model is characterized
by a core platform with “plug and play”
capabilities for adding and shedding
of assets, businesses, capabilities
and services. It allows for rapid
reconfiguration of contract portfolios
and better risk management.
The ability to flex with commodity price
cycles enables businesses to turn price
volatility into an advantage.
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Strategic agility
Assuming lower prices are the new normal,
scenario planning—with time horizons ranging
from six to 18 months—can help companies adapt
faster to business change.
An agile mindset is needed to:
• Capture differential plays for natural gas liquids, lightly
processed crude, products and numerous blends.
• Modify pipelines or segments to bi-directional flows to
increase flexibility and optionality.
• Plan for export possibilities depending on
regulatory change.

8. Agility for risk management
Nimble operating models and processes can also help
midstream companies:
• Actively manage commodity price risk.
• Anticipate changes in upstream capital projects.
• Manage credit risks.
• Shift to fee-based arrangements.
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9. Emphasize safe and
reliable operations.
Lower oil prices and safety incidents
involving rail transport are likely to
speed development of pipelines—
intelligent pipelines, in particular.
Digital technologies and the Industrial
Internet can integrate internal asset
data with operational and integrity data,
along with external weather data and
one-call tickets. There are effective ways
to view pipeline assets, enhance
situational awareness and run predictive
analytics at scale.
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Safety and reliability
depend on people
Cost control needs to be balanced with
attracting and retaining the right
people. Consider luring experienced
people unemployed in other sectors, or
still employed yet receptive to making a
change. To gain approval for pipeline
expansion projects, the industry
needs to emphasize safety and
operational excellence.

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Pursuing high
performance
Price volatility and portfolio
realignments in energy are
increasing prospects for acquisition
and expansion in the midstream
segment of the industry. Nimble
operating models can help leaders
enhance adaptability, creating agile
organizations that can better
navigate the crude and natural gas
cycles for high performance.

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